Speaking at the Digital Acceleration & Transformation Expo in the capital, organised by Trescon, the minister said: “Enthusiasm is good but sometimes it becomes a bit too far for people to digest. So as a measure of caution the RBI (Reserve Bank of India) has also alerted small finance banks, NBFCs to be careful that they don’t go too far too soon and face any downside risks later.”
Earlier this month, the RBI tightened the norms for unsecured consumer loans, as it directed banks and shadow banks to assign a higher risk weight to such credit. RBI governor Shaktikanta Das on Wednesday said it was a “preemptive” move to ensure financial stability, as he cautioned against undue “exuberance” in lending.
Advice for banks
The minister also exhorted state-run banks to further improve efficiency in drawing depositors while remaining cognisant of their role in satiating the vast credit appetite of a fast-growing economy.
“Get deposits, give them (depositors) good interest rates, and then make good money out of it as well. But at the same time, be possibly conscious (of the fact that) India’s growth depends on banks lending comfortably to people who want to set up units and grow them,” Sitharaman asked the public-sector banks.
According to the RBI data, non-food bank credit growth touched 15.3% in September, which is lower than the 16.9% a year before but well above the long-period trend.
Regulations vs innovation
The government has asked capital markets regulator Sebi to seek inputs from shareholders while drafting norms and rework them if the proposals are perceived to be much too restrictive, Sitharaman said, seeking to allay industry concerns that “over-restrictive regulations” would kill innovation.
Highlighting the need for striking a balance between regulation and innovation, Sitharaman said: “The government has been suggesting to Sebi that before they come up with any regulation that can be perceived as being restrictive, they should actually consult industry and stakeholders. Even at the draft stage, take their inputs and go back to the drawing board if there is anything else which has to be tweaked or redrawn, keeping these stakeholders’ interests in mind.”
“And I’m happy to say that Sebi has already started doing this,” the minister said.
Account aggregators
Sitharaman stressed that customer data shared with account aggregators (AA) is completely safe. As for the slow movement of the AA network, the proposed financial data-sharing system, the minister said “It is not as much as I would want to see”. “It can be better, which means either the building of awareness exercises are not sufficient, adequate” or there is a need to further simplify technology.
The minister also called for raising awareness among people to stop scamsters from gaming the system and resorting to cyber frauds.
